Bridge Financing in Canada: How Buying Before Selling Works (2026)

What Bridge Financing Actually Covers

Bridge financing is a short-term loan that covers the gap between the closing date on your new home and the closing date on the sale of your current one. You end up carrying both properties briefly, and the bridge loan covers the down payment or equity you need for the new purchase before your existing home's sale proceeds actually arrive.

It is secured against the equity in your current home. If your home is worth $500,000 and you owe $300,000, you may qualify for a bridge loan up to roughly $200,000, minus expected closing costs.

The Firm Sale Requirement

Lenders need to see a firm, unconditional sale agreement on your current home before approving a bridge loan, an accepted offer with all conditions removed. Without a firm sale in place, true bridge financing is not available; you would need a different arrangement (a larger down payment from other sources, a contingent purchase offer, or delaying the purchase).

This is the single biggest planning constraint: bridge financing assumes your sale is locked in, it is not a tool for buying before you have sold at all.

How Much It Costs

Bridge loans are typically priced at prime plus 1% to 2%. Payments are interest-only on the bridged amount, and interest usually accumulates daily rather than being paid monthly, most lenders collect the full interest owed when your existing home closes rather than requiring payments during the bridge period itself.

On a $500,000 bridge at roughly 7%, the daily-accrual interest works out to about $2,900/month, or roughly $8,750 over a 90-day bridge. Add lender processing fees ($400-$600) and legal fees to register the loan ($200-$500), and total carrying costs for a 90-day bridge at that amount typically land in the $9,000-$14,000 range.

Typical Terms and Limits

• Term length: typically 30-180 days, most commonly a few days up to around 90-120 days • Amount: based on the equity in your current home minus expected selling costs • Requirement: a firm, subject-free sale agreement on your current property • Lender: usually easiest to arrange with the lender already financing your new purchase, though not always required

Bridge Financing vs the Alternatives

Bridge financing is not the only way to handle a buy-before-you-sell timing gap:

• Rent-back arrangement: negotiate staying in your sold home for a period after closing, avoiding the bridge loan entirely, but this depends on the buyer agreeing • Contingent offer: make your purchase conditional on selling your current home first, avoids financing costs but is a much weaker offer in a competitive market • HELOC: if you already have one in place before listing your home, it can sometimes cover the same gap at a lower rate than a purpose-built bridge loan

Bridge financing tends to win when you need a firm, uncontingent offer on the new property and a rent-back is not available or not enough time.

Planning Checklist Before You Rely on a Bridge Loan

1. Get your current home listed and sold firm before finalizing your purchase timeline 2. Confirm your lender offers bridge financing and get an estimate of the amount and cost 3. Compare that estimated cost against a HELOC (if you have one) or negotiating a longer closing window instead 4. Build a buffer into your closing dates, a 90-day bridge estimate can run longer if either closing slips 5. Ask your lender or broker to confirm the exact fees (processing, legal, per-diem interest rate) in writing before you commit to overlapping closing dates